UNITED STATES PATENT AND TRADEMARK OFFICE
`_______________
`
`BEFORE THE PATENT TRIAL AND APPEAL BOARD
`
`_______________
`
`APPLE INC.
`Petitioner,
`
`v.
`
`MAXELL, LTD.,
`Patent Owner
`_______________
`
`Case: IPR2020-00409
`
`U.S. Patent No. 6,580,999
`_______________
`
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`
`
`PATENT OWNER’S AUTHORIZED PRELIMINARY SUR-REPLY
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`
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`
`
`Mail Stop Patent Board
`Patent Trial and Appeal Board
`U.S. Patent and Trademark Office
`P.O. Box 1450
`Alexandria, VA 22313-1450
`
`
`
`
`
`
`
`_______________
`
`BEFORE THE PATENT TRIAL AND APPEAL BOARD
`
`_______________
`
`APPLE INC.
`Petitioner,
`
`v.
`
`MAXELL, LTD.,
`Patent Owner
`_______________
`
`Case: IPR2020-00409
`
`U.S. Patent No. 6,580,999
`_______________
`
`
`
`
`
`PATENT OWNER’S AUTHORIZED PRELIMINARY SUR-REPLY
`
`
`
`
`
`
`
`
`Mail Stop Patent Board
`Patent Trial and Appeal Board
`U.S. Patent and Trademark Office
`P.O. Box 1450
`Alexandria, VA 22313-1450
`
`
`
`
`
`
`
`
`
`
`PATENT OWNER’S UPDATED EXHIBIT LIST
`
`Description
`Decision denying Apple’s Motion to Stay
`4/20/20 Scheduling Order from District Court Action
`5/31/19 Scheduling Order from District Court Action
`Docket from District Court Action
`Markman Decision from District Court Action
`1/8/20 Minute Order
`8/28/19 Minute Order
`9/18/19 Minute Order
`Declaration of Tiffany A. Miller
`5/8/20 Notices of Compliance
`Hayashida Chart from Apple’s Expert Report from District Court
`Action
`Abowd Chart from Apple’s Expert Report from District Court Action
`Maxell’s Infringement Contentions from District Court Action
`Maxell’s Final Election of Claims
`Apple’s Final Election of Prior Art
`Apple’s Invalidity Contentions from District Court Action
`Hayashida Chart from Apple’s Invalidity Contentions
`3/10/15 Letter from Apple to Maxell
`5/15/15 Letter from Apple to Maxell
`’498 IPR Petition (ASUS)
`’498 IPR Preliminary Response
`Wayback Machine excerpts
`Getting Heading and Course Information
`Getting the Heading and Course of a Device
`5/17/18 Letter from Maxell to Apple
`COVID Standing Order
`March 6, 2017 Scheduling Order from Maxell v. ZTE
`June 5, 2018 Scheduling Order from Maxell v. ZTE
`Docket from District Court Action
`
`Exhibit #
`2001
`2002
`2003
`2004
`2005
`2006
`2007
`2008
`2009
`2010
`2011
`
`2012
`2013
`2014
`2015
`2016
`2017
`2018
`2019
`2020
`2021
`2022
`2023
`2024
`2025
`2026
`2027
`2028
`2029
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`
`
`
`
`
`
`
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`Maxell’s Notice of Compliance Regarding Rebuttal Expert
`Reports
`June 3, 2020 Order in District Court Action
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`
`2030
`
`2031
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`
`
`
`
`ii
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`
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`I.
`
`INTRODUCTION
`Every Fintiv factor favors denial of Apple’s Petition. Apple knows this,
`
`which is why it spends the majority of its Reply attacking the Board’s precedential
`
`Fintiv decision. But it is well settled that “the Director has complete discretion to
`
`decide not to institute review.” Saint Regis Mohawk Tribe v. Mylan Pharms. Inc.,
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`896 F.3d 1322, 1327 (Fed. Cir. 2018); see also Cuozzo Speed Techs., LLC v. Lee,
`
`136 S. Ct. 2131, 2140 (2016) (“[T]he agency’s decision to deny a petition is a
`
`matter committed to the Patent Office’s discretion.”). Indeed, the Board has
`
`already rejected Apple’s policy arguments. Apple v. Fintiv, IPR2020-00019, Paper
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`15 at 11-12 (May 13, 2020).
`
`The NHK and Fintiv line of cases recognize discretionary denial is
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`appropriate for precisely the situation present here, where one of the largest
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`companies in the world uses the IPR process, not as a less-expensive alternative to
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`litigation, but as an overall gambit to litigate without end. Apple’s perverse attempt
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`to cast itself as a martyr if the Board denies institution here ignores that Apple was
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`entirely in control of when its IPR Petition was filed. Apple purposefully chose to
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`delay filing its Petition, and elected to litigate in the District Court rather than
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`focus on preparation of its Petition. See Paper 6 at 15-19. These facts remain
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`unrebutted.
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`
`
`1
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`
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`The District Court Action is set for trial beginning October 26, 2020. Ex.
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`2001. Apple has known about the trial date since May 31, 2019, over six months
`
`prior to filing its Petition. Id. An oral hearing will not occur until about May 2021,
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`and a Final Written Decision is expected August 12, 2021—ten months after trial.
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`These were the facts when Apple filed its Petition; these are the facts now. Apple’s
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`statistical speculation on whether a trial date may be continued does not change
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`these facts, nor should it persuade the Board to ignore sound precedent.
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`II. THE FINTIV FACTORS OVERWHELMINGLY FAVOR DENIAL
`Here, the Fintiv factors overwhelmingly favor denial of institution.
`
`A.
`Factor 1: The District Court Denied Apple’s Motion to Stay
`On April 27, 2020, the Court denied Apple’s motion to stay, noting that
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`“Apple has not sufficiently explained its delay in filing the [IPR] petitions. Apple
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`filed its first wave of petitions nine months after Maxell filed suit and six months
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`after Maxell served its initial infringement contentions.” Ex. 2001 at 4-5. The
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`Court concluded that “The case is not in its infancy and is far enough along that a
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`stay would interfere with ongoing proceedings.” Id. at 4. Though the Court denied
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`the motion without prejudice, it presaged that “[t]he late stage of the proceedings
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`will certainly weigh against granting a stay” because the last institution
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`decisions will only be complete on September 25, 2020, one month prior to trial.
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`
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`2
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`
`
`
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`Id. at 6 (emphasis added). This Fintiv factor favors denial.
`
`B.
`
`Factor 2: Trial In The District Court Action Will Occur Ten
`Months Before The Board’s Final Written Decision
`Trial will be complete ten months before a Final Written Decision issues. As
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`the Board has recognized, this fact pattern weighs in favor of denying the Petition.
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`And, contrary to Apple’s argument (Reply at 5), focus on a trial date is not myopic,
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`particularly where Apple waited until well into the litigation to file IPRs. See Paper
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`No. 6 at 7-9 (collecting cases denying institution with trials set well before FWD);
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`see also Samsung v. Uniloc, IPR2020-00117, Paper 11 (PTAB May 28, 2020)
`
`(same); Intel v. VLSI Technology, IPR2020-00158, Paper 16 (PTAB May 20, 2020)
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`(same); Cisco v. Ramot at Tel Aviv U, IPR2020-00123, Paper 14 (PTAB May 15,
`
`2020) (same).
`
`Apple does not dispute that these facts favor denying institution. Instead,
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`Apple speculates that the current trial date may be continued. Even were the trial
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`date continued by three months, which is unlikely, the trial would still precede the
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`Final Written Decision by seven months. Further, it is unlikely that the District
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`Court will continue the trial even were the Board to institute, as the institution
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`decision will come only two months prior to the scheduled trial date. Apple
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`attempts to use Docket Navigator statistics to predict a 40% chance of a trial
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`continuance. Reply at 5. However, these statistics are general and relate to a
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`
`
`3
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`
`
`
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`variety of cases all over the country. In the jurisdiction where the District Court
`
`Action is pending, however, a Standing Order issued “to keep cases moving”
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`despite COVID-19, and an in-person hearing will occur on a remaining discovery
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`motion in the near future. See Ex. 2026; Ex. 2031. Thus trial is likely to proceed as
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`scheduled. Apple’s statistics ignore this reality. Further, at the trial involving
`
`Maxell and ZTE, handled by the same presiding judge in the underlying litigation
`
`here, the Eastern District of Texas moved the trial date earlier than originally
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`scheduled as a result of a vacancy in the Court’s trial schedule. Compare Ex. 2027
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`with Ex. 2028.
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`Apple has known about Maxell’s allegations in the District Court Action for
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`well over a year. Exs. 2018-2019; 2025. Yet, Apple waited until six months after it
`
`was sued to begin preparing its Petition. See Apple Inc. v. Maxell Ltd., IPR2020-
`
`00204, Paper 1 at 46. Here, trial will occur ten months before the Final Written
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`Decision. There is no evidence to the contrary. See Fintiv, IPR2020-00019, Paper
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`15 at 13 (“We generally take courts’ trial schedules at face value absent some
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`strong evidence to the contrary.”) This Fintiv factor favors denial.
`
`C.
`
`Factor 3: Significant Investment of Time and Resources By The
`Court and the Parties Has Already Occurred
`There has been significant time and resources invested by both the Court and
`
`the parties in the District Court Action, pending now for over one year. See
`
`
`
`4
`
`
`
`
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`generally Ex. 2029. While Apple gives short shrift to the Court’s investment of
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`time and resources (“The Court has little substantive investment”), it completely
`
`ignores the parties’ investment of time and resources as called for by Fintiv factor
`
`3. Reply at 8.
`
`1.
`
`The District Court Has Invested Significant Time and
`Resources on the District Court Action
`The Court has invested significant time and resources into the District Court
`
`Action. For example, the Court conducted a four-hour Markman hearing and
`
`issued a 57-page Markman order with a detailed discussion of a number of
`
`disputed claim terms and phrases for the ten patents at issue in the District Court
`
`Action. Exs. 2005-2006. The Court also has invested many hours in holding
`
`arguments and issuing numerous rulings on various motions, including Apple’s
`
`motion to dismiss, motion to transfer, and motion to stay along with several
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`discovery related motions and the parties’ other motions. See Exs. 2006-2008. As
`
`the Court noted, “The case is not in its infancy. . . .” Ex. 2001 at 4.
`
`2.
`
`The Parties Have Invested Significant Time and Resources
`on the District Court Action
`The parties have also invested significant time and resources into the District
`
`Court Action. For example, fact discovery closed on March 31, 2020, except for
`
`remaining depositions postponed due to COVID-19 that are now complete. Ex.
`
`
`
`5
`
`
`
`
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`2002. During fact discovery, the parties collectively produced nearly 2 million
`
`pages of documents, conducted 35 depositions, filed 20 motions, and served 50
`
`interrogatories and 120 requests for admission. Paper 6 at 10-11. The parties also
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`served over 30 third-party subpoenas. Id. Expert discovery is underway and closes
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`June 25, 2020. Maxell’s experts have already spent nearly 600 hours reviewing
`
`source code produced by Apple. Id. Maxell’s expert report regarding infringement
`
`and Apple’s expert reports regarding invalidity of the ’999 Patent were served on
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`May 7, 2020 and Maxell’s rebuttal reports regarding the validity of the ’999 Patent
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`was served on June 4, 2020 after substantial expense and effort by counsel and
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`experts on both sides. Ex. 2017; Ex. 2030 (Maxell notice of compliance). Contrary
`
`to Apple’s claim (Reply at 9), Maxell has responded substantively to its invalidity
`
`contentions. Ex. 2030. Between June 12 and June 25, the parties will take fifteen
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`expert depositions. This Fintiv factor favors denial.
`
`D.
`
`Factor 4: There is Significant Overlap Between Issues Raised In
`The Petition And In The District Court Action
`The scope of Apple’s challenge to the ’999 Patent’s validity in this
`
`proceeding is substantially the same as in the District Court Action. For example,
`
`there is overlap in the claims challenged in both proceedings. Here, Apple asserts
`
`that Claims 1-6 of the ’999 Patent are unpatentable. Petition at 1. These claims
`
`cover all the asserted claims against Apple in the District Court Action at the time
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`
`
`6
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`
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`
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`Apple filed its Petition. See Ex. 2013 at 2. Pursuant to the District Court Action
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`scheduling order, months after the filing of the Petition, on March 17, 2020,
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`Maxell made a Final Election of Asserted Claims; and, on April 7, 2020, Apple
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`made a Final Election of Prior Art. Ex. 2014; Ex. 2015.
`
`The prior art that Apple relies on in its Petition is the same, or substantially
`
`the same, as the prior art at issue in the District Court Action. For example, in the
`
`Petition, Apple proposes one ground, utilizing Hayashida and Abowd as
`
`references. Petition at 14. In the District Court Action, Apple prominently uses
`
`Hayashida and Abowd as references both in its Invalidity Contentions and its
`
`Expert Report. Ex. 2016 at 6; Ex. 2017; Exs. 2011-2012. Apple’s expert in the
`
`District Court Action relies heavily on Hayashida and Abowd to set forth Apple’s
`
`invalidity case for the trial in the District Court litigation See Ex. 2011-2012; see
`
`also Paper 6 at 11-14. Indeed, Apple relies on a similar declaration from Mr.
`
`Munford in the District Court Action to establish that Abowd is prior art, forcing
`
`further duplication of efforts across the proceedings if Institution occurs.
`
`Apple’s claim that the ground in the Petition no longer remains in the
`
`litigation is disingenuous at best. First, Apple relied upon the same prior art and
`
`grounds in the litigation as this Petition until at least April 7, 2020 at which point it
`
`selectively dropped certain prior art references in an attempt to compensate for its
`
`
`
`7
`
`
`
`
`
`delay in filing its Petition and avoid discretionary denial. But from August 15,
`
`2019 through April 7, 2020, Apple relied on identical prior art. Second, Apple’s
`
`claim that CyberGuide in view of Hayashida is “materially different” from its
`
`proposed ground is surprising. The combination of Hayashida and Abowd is
`
`substantially similar to the combination of CyberGuide and Hayashida, because as
`
`acknowledged by Apple, CyberGuide is simply system prior art allegedly
`
`described and developed by Abowd et al. In any event, Apple and its expert are
`
`still relying on Abowd in the litigation as part of its CyberGuide set of references.
`
`See, e.g., Exs. 2012; 2015.
`
`Nor can Apple avoid denial simply by challenging extraneous unasserted
`
`claims that raise the same invalidity issues as the asserted ones. First, the Court
`
`ordered Maxell to elect a narrower set of claims. This narrowing should not have
`
`an impact on the Board’s decision. See NetApp Inc. v. Realtime Data LLC,
`
`IPR2017-01195, Paper 9 at 7-8 (PTAB Oct. 12, 2017). Second, Apple itself
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`acknowledges the substantial overlap at least between Claims 1, 5, and 6; it
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`substantially relies on its Claim 1 analysis for Claims 5 and 6. Petition at 50-57.
`
`Moreover, even though there are some non-overlapping claims now, due to the
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`Court’s required narrowing, Apple never claims it would be harmed if the Board
`
`did not institute on the non-overlapping claims. Next Caller v. TRUSTID,
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`
`
`8
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`
`
`
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`IPR2019-00961, Paper 10 at 14 (PTAB Oct. 14, 2019).
`
`The Board should not countenance Apple’s delayed filing of its IPRs, and its
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`attempt to then take advantage of the Court’s narrowing order months after filing
`
`its petition in an attempt to avoid discretionary denial. This “gotcha” tactic further
`
`exposes Apple’s insincere claim that it seeks efficiency, and runs contrary to why
`
`the Board found NHK and Fintiv important to declare precedential.
`
`Moreover, Apple’s position in the District Court Action is that there is
`
`complete overlap of issues. “Apple reserves the right to amend its election of prior
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`art as appropriate. . . .” Ex. 2015 at 1. Apple’s invalidity contentions in the District
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`Court Action also purport to “incorporate[] by reference all prior art cited during
`
`prosecution of the Asserted Patents, and all inter partes review (IPR) petitions
`filed against the Asserted Patents and the prior art cited in these IPR petitions” Ex.
`
`2016 at 2. In other words, Apple has expressly and specifically sought to
`
`incorporate all of the Petition’s contentions into the District Court Action, a point
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`Apple fails to rebut in its Reply.
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`Thus, substantially the same issues will be decided by a jury, using
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`substantially the same prior art, ten months prior to the issuance of a Final Written
`
`Decision. At bottom, the issues presented in the Petition that differ from what will
`
`be argued in the District Court Action do not meaningfully distinguish the
`
`
`
`9
`
`
`
`
`
`arguments in this proceeding from those in the District Court Action. Edwards
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`Lifesciences Corp. v. Evalve, IPR2019-01546, Paper 7, 12-13 (PTAB Feb. 26,
`
`2020) (denying institution despite lack of a 1:1 overlap of claims and prior art,
`
`finding such distinction not meaningful). This Fintiv factor favors denial.
`
`E.
`Factor 5: Apple is Both Petitioner And Defendant
`Apple is both petitioner and defendant. Ex. 2029. This Fintiv factor favors
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`denial. Fintiv, Paper 11 at 13-14.
`
`F.
`Factor 6: Other Circumstances
`Other circumstances, such as Apple’s delay in filing the Petition weigh
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`heavily in favor of denial. See Paper 6 at 15-18. Apple’s six-page screed against
`
`NHK and Fintiv also misses the mark. Apple’s policy arguments are irrelevant to
`
`whether this Panel should follow a precedential Board decision in a case strikingly
`
`similar to the Fintiv line of cases. Indeed, the Fintiv panel expressly rejected
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`Apple’s policy arguments. Fintiv, IPR2020-00019, Paper 15 at 11-12.
`
`Apple’s extensive financial resources—as exhibited by hiring four law firms
`
`to handle the litigation and IPRs, respectively, should have allowed Apple to
`
`proceed with its defense of the District Court Action and preparation of its IPRs in
`
`parallel. Yet Apple admittedly waited months after the asserted claims were
`
`identified to even begin preparing its Petitions. This Fintiv factor favors denial.
`
`
`
`10
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`
`
`
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`III. APPLE FAILED TO SHOW ABOWD IS PRIOR ART
`Apple has failed to meet its burden to prove with particularity that Volume 3
`
`of Wireless Networks was publically accessible before July 12, 1999. See Paper 6
`
`at 45-51. Mr. Munford’s supplemental declaration only highlights this failure, and
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`outlines what is notably absent: a “satisfactory showing” that Volume 3 was
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`“disseminated or otherwise made available” to “persons interested and ordinarily
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`skilled in the subject matter or art” before the critical date. SRI Int’l, Inc. v.
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`Internet Sec. Sys., Inc., 511 F.3d 1186, 1194 (Fed. Cir. 2008).
`
`Neither Apple nor Mr. Munford detail any of the University of Pittsburgh’s
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`procedures before the critical date. Apple claims that the words “DO NOT
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`CIRCULATE” have no relevance on the question of accessibility. Not true. Mr.
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`Munford opines about his access to the volumes in 2019, not 1999, and opines
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`about his understanding in 2019 of what DO NOT CIRCULATE means: it
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`“indicates only that some restrictions are placed on the permitted transactions.” Ex.
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`1054, 2. He does not and cannot opine on what those restrictions were in 1999
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`generally, nor specifically at the University of Pittsburgh in 1999. Mr. Munford has
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`no experience working in a university library, and did not begin his career in the
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`public library sector until 2004, years after the critical date. Ex. 1009, 2, 10-12.
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`11
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`Dated: June 12, 2020
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`
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`Respectfully submitted,
`
`/Robert G Pluta Reg No 50970 /
`Robert G. Pluta (Reg. No. 50,970)
`Amanda S. Bonner
`Registration No. 65,224
`MAYER BROWN LLP
`71 S. Wacker Drive
`Chicago, IL 60606
`
`Jamie B. Beaber
`(Pro Hac Admission to be Sought)
`James A. Fussell
`Registration No. 54,885
`Saqib J. Siddiqui
`Registration No. 68,626
`MAYER BROWN LLP
`1999 K Street, NW
`Washington, D.C. 20006
`
`
`
`12
`
`
`
`
`
` CERTIFICATE OF SERVICE
`
`I hereby certify that on this 12th day of June, 2020, a copy of the
`
`attached PATENT OWNER’S AUTHORIZED PRELIMINARY SUR-REPLY
`
`was served by electronic mail to the attorneys of record, at the following addresses:
`
`Jennifer C. Bailey
`Jennifer.Bailey@eriseip.com
`PTAB@eriseip.com
`Adam P. Seitz
`Adam.Seitz@eriseip.com
`ERISE IP, P.A.
`7015 College Blvd., Suite 700
`Overland Park, Kansas 66211
`Telephone: (913) 777-5600
`Fax: (913) 777-5601
`
`
`Paul R. Hart
`Paul.Hart@eriseip.com
`ERISE IP, P.A.
`5600 Greenwood Plaza Blvd., Ste. 200
`Greenwood Village, Colorado 80111
`Telephone: (913) 777-5600
`Fax: (913) 777-5601
`
`
` Respectfully submitted,
`
`
`Date: June 12, 2020 By:
`
`
`/Robert G Pluta Reg No 50970/
`Robert G. Pluta
`MAYER BROWN LLP
`
`
`
`
`
`13
`
`
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